APM Terminals: Significant interest in the Nicaragua Canal

APM Terminals have been contacted by several parties about new port projects in relation to the planned Nicaragua Canal. It is still too early to decide anything, Joe Nielsen, CEO Latin America, tells ShippingWatch.

Photo: APM Terminals

The large-scale project to establish a waterway through Nicaragua has made several parties contact APM Terminals about new potential projects that they would like the port operator to participate in, says Joe Nielsen, the company's CEO for Latin America, who has lived in Panama for three years, where the Nicaragua Canal project is not viewed kindly.

"Naturally there are many people frequently contacting a company such as ours, which has projects all over the world. We've been in contact with people making inquiries about potential ports that could be built in relation to the canal," he tells ShippingWatch, stressing that the port company is currently not involved in the project.

The final canal route through Nicaragua

Final route settled for the Nicaragua Canal

The ambition of building a 278 kilometer canal - which will be able to handle the biggest container ships, the ones that cannot currently use the Panama Canal - is interesting, says Joe Nielsen. But he stresses that it remains mostly an idea on the drawing board, even though a feasibility study will be published this October, aimed at evaluating the key elements of the colossal project. And such, the answer for the people contacting the company is as follows:

"Let's first get the canal, then we can look into whether it needs a port," says Joe Nielsen.

First of all, the project needs to settle the financing, he says. A central building block in the project, which will cost an estimated USD 40 billion to construct. And that is also one reason APM Terminals is somewhat skeptical about the realism of the project - at least until the financing has been settled:

"The really interesting thing will be to follow whether they're able to secure financing. So far it's difficult to tell how far along they are with the project, until the day someone actually puts some money on the table and says they're ready to finance it," he says, adding:

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"It's always interesting when people are planning to build something on this scale. USD 40 billion for Nicaragua is incredibly dramatic. This is our industry, and such we of course have an interest in keeping a close eye on the project and staying informed. But it does not, as such, have a direct impact on our daily decision-making process."

Not crucial for APM Terminals

Joe Nielsen stresses that APM Terminals does not as such have a major interest in whether there are one or two canals in Latin America, because the port operator does not currently have any ports located close to either the Panama Canal or the coming Nicaragua Canal. The company is working on a project in Costa Rica, but for this project APM Terminals does not depend on the cargo coming through the Panama Canal, he explains:

"We have a single port in Costa Rica, north of the Panama Canal, but this port is being built mainly for the import/export going to and from Costa Rica. Primarily the country's massive banana and pineapple export, which is sent to the US and EU. But these are not containers going through the canal, these are containers from the agricultural areas inland that are shipped straight from there to the EU or the US. Not through the canal."

Still, it is important for APM Terminals to stay up to date on developments.

"If a canal is built in Nicaragua, it will naturally result in a different demand from our customers, and we will of course look into this, which is why we're following the project. But until the time comes when this moves beyond the drawing board, it's difficult for us to look further into whether we should be investing in the vicinity of the possible new canal," says Joe Nielsen.

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Whereas APM Terminals is awaiting developments, the coming competitor to the Nicaragua Canal - the Panama Canal - is preparing yet another expansion. The current expansion with an additional water lock is expected ready in about one year, and it looks likely that there will come another one after this, says Joe Nielsen. Probably because of increased competition from a new canal, but also because of the fact that ships are getting increasingly bigger.

"They're preparing for two things: The increasing competition, which could potentially arise. But also the fact that the size of the ships going through the Panama Canal has grown faster than expected by most. The canal can handle big ships, but not the biggest ones that are currently sailing the world seas," he says, adding:

"It's very early, but talk around town in Panama is that they are not going to stand idle by and watch while someone takes away their national treasure."

Plan for the Nicaragua Canal approved

Industry working to get a slice of the Nicaragua Canal

Plan for the Nicaragua Canal ready next month

Construction on Panama-competitor to begin in 2014 

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